STARKS v. RSM SECURITY PTY. LTD. & ORS. [2004] NSWCA 351

Court of Appeal (NSW)|2004-08-18|Before: Sheller JA, Beazley JA, Grove J

Reported Decision : (2004) Aust Torts Reports 81-763

CITATION : STARKS v. RSM SECURITY PTY. LTD. & ORS. [2004] NSWCA 351 HEARING DATE(S) : 18 August 2004 JUDGMENT DATE : 28 September 2004

JUDGMENT OF : Sheller JA at 1; Beazley JA at 2; Grove J at 47 DECISION : 1. Appeal allowed in part and dismissed in part.; 2. Set aside verdict for the second defendant (first respondent).; 3. Verdict for the plaintiff as against the second defendant, judgment accordingly.; 4. Verdict for the third and fourth defendants (second and third respondents) affirmed.; 5. Set aside the costs order below in favour of the respondents.; 6. First respondent to pay appellant's costs of the appeal and of the hearing at first instance.; 7. The second and third respondents to bear their own costs of the appeal and in the Court below, except to the extent that they separately incurred costs in the preparation of the case at first instance and on the appeal that were not incurred in common with the costs incurred by the first respondent. The appellant is to pay any such separately incurred costs.

CATCHWORDS : TORT - Vicarious liability of employer - Circumstances in which an employer can be vicariously liable for an unauthorised and illegal act of its employee - Employer not liable for a wrongful act of an employee committed "on a frolic of his own" - TORT - Vicarious liability for acts of an independent contractor - the principal exercising control over independent contractor independent contractor acting as "representative" of the principal. - STATUTORY CONSTRUCTION - Liquor Act 1982 - Statutory obligation imposed upon licensee - Non-delegability of obligation under Act does not render it non-delegable for the purposes of tort law. - STATUTORY CONSTRUCTION - Liquor Act 1982, s.103 - Use of excessive force in tasks authorised by section - Section has nothing to say about liability of a licensee for use of excessive force by a third party not directly employed by it. LEGISLATION CITED : Liquor Act 1982 (NSW) Supreme Court Act 1970 (NSW) Canadian Pacific Railways Co v. Lockhart (1942) AC 591 Colonial Mutual Life Assurance Society Limited v. Producers and Citizens Co-Operative Assurance Co of Australia (1931) 46 CLR 41 Deatons Pty. Limited v. Flew (1949) 79 CLR 370 Gee v. NWQ Management Pty. Limited & Ors. [2002] NSWCA 77 CASES CITED : Hollis v. Vabu Pty. Limited (2001) 207 CLR 21 Morris v. C.W. Martin & Sons Limited [1966] 1 QB 716 North Sydney Leagues Club Limited v. Berecry & Ors. (2002) NSWCA 154 Northern Sandblasting Pty. Limited v. Harris (1997) 188 CLR 313 State of New South Wales v. Lepore [2003] 212 CLR 511 Stevens v. Brodribb Sawmilling Co Pty. Limited (1986) 160 CLR 16 Byron Starks (Appellant) PARTIES : RSM Security Pty. Ltd. (First Respondent) Hotel Bondi Pty. Ltd. (Second Respondent) Cyril Gardner Maloney (Third Respondent) FILE NUMBER(S) : CA 41191/2003 COUNSEL : R.S. McIlwaine SC/J. Loxton (Appellant) D.A. McLure (Respondent) SOLICITORS : Maurice May & Co. (Appellant) Shearman Lawyers (Respondents)

LOWER COURT District Court JURISDICTION : LOWER COURT 5150/02 FILE NUMBER(S) : LOWER COURT Garling DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41191/03

SHELLER JA BEAZLEY JA GROVE J

28 September 2004 STARKS v. RSM SECURITY PIN THE SUPREME COURT OF NEW SOUTH WALES

The appellant was head-butted by a security guard, who had requested him to leave the premises of the Bondi Hotel. The appellant had disputed the security guard's request that he leave. As a result of the incident, the appellant suffered an injury.

The appellant brought proceedings against the security guard, the security guard's employer, the owner/ occupier of the hotel and the hotel's licensee, claiming damages for his injuries. The trial judge found that the security guard was liable in damages for the assault, but rejected the appellant's claims against the other parties.

The appellant sought leave to appeal against the verdicts entered in favour of the employer, the owner/occupier of the hotel and the hotel's licensee. The leave application and the appeal were heard concurrently HELD per Beazley JA (Sheller JA and Grove J agreeing):

(i) Leave to appeal, as required under s.101(2)(r) of the Supreme Court Act, granted. The matter raised the important questions of (a) the circumstances in which an employer can be vicariously liable for an unauthorised and illegal act of its employee and (b) when a party is vicariously liable for such acts of a third party (the security guard).

(ii) Although it is the general rule that an employer is vicariously liable for a tort or other actionable wrong committed by an employee in the course of employment, an employer will not be vicariously liable for a wrongful act of the employee if it is committed by the employee "on a frolic of his [sic] own" : Morris v. C.W. Martin & Sons Limited [1966] 1 QB 716; State of New South Wales v. Lepore [2003] 212 CLR 511.

(iii) An employer may be liable for an unauthorised act if such act is so closely connected with authorised acts as to be regarded as a mode of doing the authorised act: Hollis v. Vabu Pty. Limited (2001) 207 CLR 21; Salmond, The Law of Torts .

(iv) The act of the security guard in head-butting the appellant was so directly connected with his authorised acts that the employer was vicariously liable for the damage that resulted from it.

(v) In general, a person is not liable for the wrongful act of an independent contractor unless the person has directly authorised the act: Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co-operative Assurance Co of Australia (1931) 46 CLR 41; Northern Sandblasting Pty Limited v Harris (1997) 188 CLR 313.

(vi) An independent contractor may be liable where the principal exercised a significant degree of control and direction over the actions of the independent contractor or where the independent contractor is acting as a true agent representing the principal in dealing with third parties: Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co-operative Assurance Co of Australia (1931) 46 CLR 41; Hollis v Vabu (2001) 207 CLR 21.

(vii) There was no evidence that the employer was carrying out the security arrangements as the hotel's representative or that the security guards were subject to the hotel's general direction and control. Hence, the hotel was not vicariously liable for the security guard's wrong. (ix) Although the Liquor Act imposes a statutory obligation upon the licensee in respect of the conduct of the premises and makes those obligations non-delegable, it does not follow that the duties are non-delegable for the purposes of tort law: Gee v NWQ Management Pty Limited & Ors [2002] NSWCA 77.

(x) Section 103 of the Liquor Act has nothing to say about the liability the hotel may have when a security guard, not directly employed by it uses excessive force in carrying out a task otherwise authorised by s.103.

Set aside verdict for the second defendant (first respondent).

Verdict for the plaintiff as against the second defendant, judgment accordingly.

Verdict for the third and fourth defendants (second and third respondents) affirmed.

Set aside the costs order below in favour of the respondents.

First respondent to pay appellant's costs of the appeal and of the hearing at first instance.

The second and third respondents to bear their own costs of the appeal and in the Court below, except to the extent that they separately incurred costs in the preparation of the case at first instance and on the appeal that were not incurred in common with the costs incurred by the first respondent. The appellant is to pay any such separately incurred costs.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41191/03

SHELLER JA BEAZLEY JA GROVE J

28 September 2004 STARKS v. RSM SECURITY PTY. LIMITED & ORS. Judgment 1 SHELLER JA: I agree with Beazley JA. 2 BEAZLEY JA: In the early hours of 18 November 2000, Byron Starks was at the Bondi Hotel playing on a games machine. He had been at the hotel for several hours during which time he had been drinking. One of the bouncers at the hotel, Eugene Wilson, asked Mr. Starks to leave. Mr. Starks disputed that there was any reason for him to do so. There was no suggestion that Mr. Starks, in protesting his right to remain on the premises, acted in any way aggressively. Nonetheless, Mr. Wilson head-butted Mr. Starks, knocking him out for a short period of time. As a result of the attack, Mr. Starks suffered a concussion injury, a left shoulder injury and serious psychological damage. He brought proceedings against Mr. Wilson, Mr. Wilson's employer, RSM Security Pty. Limited, the owner and occupier of the hotel, Hotel Bondi Pty. Limited and the hotel's licensee, Cyril Maloney, claiming damages for his injuries. 3 Mr. Starks' claim was heard by Garling DCJ who found that Mr. Wilson was liable in damages for the assault. He awarded Mr. Starks damages in the sum of $97,017.00. However, his Honour rejected the claims against the employer, the hotel and the licensee and entered verdicts in their favour. Mr. Starks seeks leave to appeal against those verdicts. The Summons for Leave to Appeal, and if granted, Leave to Appeal, have been heard together.

Grant of leave 4 Mr. Starks required leave to appeal because his verdict was less than $100,000.00: Supreme Court Act 1970 (NSW), s.101(2)(r). In my opinion, leave should be granted in respect of each of the opponents. The amount in issue is substantial and the matter to be determined raises two important questions. The first is the circumstances in which an employer can be vicariously liable for an unauthorised and illegal act of its employee. The second is the further question of when a party, in this case the hotel owner and the licensee, are vicariously liable for such acts of a third party.

Facts 5 At the time of the assault, Mr. Starks was 41 years old and was working as a security officer. He suffers from a genetic condition known as spinocerebellar ataxia, which, from time to time, affects his gait and his speech, which may become slurred or he may stutter. It appears that the onset of these symptoms is unpredictable. He said however that on the day of the assault, he was "feeling good" and had not fallen down or stumbled all day. He said that he was walking like anyone "who didn't have the condition". 6 After work on 17 November 2000, he went to the Bondi Hotel where he had a few drinks and was playing a video game on a coin operated machine. Mr. Starks ran out of coins and went to another section of the hotel to get change. As he was returning to the machine, he was approached by Mr. Wilson, the security officer, and told that he was too drunk and had to leave. Mr. Starks responded that "there was nobody in the hotel that wasn't drunk why do I have to leave. All I'm doing is playing Pacman". Mr. Wilson told him that he had to leave any way. Mr. Starks then told Mr. Wilson that he was a security officer himself and said "I've done the job you're doing right now and again I'm asking why I would have to leave when I'm not doing anything wrong. I'm not arguing with anyone, I'm not fighting with anyone. No one is mad at me. I have not upset anybody at all. I'm not even going into the bar to get another drink. I'm just going to play a game of Pacman and then I'm going home like I've done for nearly 2 years". Mr. Starks then took out his Security Officers Licence and showed it to Mr. Wilson. As Mr. Starks was putting the licence back into his wallet, Mr. Wilson head-butted him, striking him in the jaw and the mouth and knocking him unconscious. 7 Mr. Wilson was subsequently charged with assault and pleaded guilty to the charge. Apparently, he has not been seen or heard of since although the trial judge noted that he defended the claim, being represented by the solicitors who appeared for his employer. Obviously, he did not give evidence, and the only evidence before the trial judge was that of Mr. Starks. The trial judge found that Mr. Wilson assaulted Mr. Starks without any legitimate excuse and it followed that Mr. Starks was entitled to a verdict against him. His Honour then indicated that the real dispute in the case was the liability of the other defendants. That remains the issue on the appeal.

Trial judge's reasons 8 His Honour held that Mr. Wilson, in assaulting Mr. Starks, was not acting within the scope of his employment. His Honour observed that Mr. Wilson had directed Mr. Starks to leave the premises but had not tried to escort him out or give him any warning as to what he was about to do. His Honour held: "It appears there is no reason for [Wilson] to have acted in the way he did, that is, to suddenly head-butt someone who was talking to him even if he believed that that person was affected by alcohol. There is not the slightest indication that the plaintiff was threatening him or causing any problems … it came out of the blue, and he clearly was not acting in the scope of his duty as a security guard." 9 It followed on that finding that the employer was not vicariously liable for the assault. 10 The trial judge treated the claim against the hotel and the licensee as being a single or joint claim and he made no specific findings against the licensee. Accordingly, unless otherwise indicated, any reference I make to the hotel will include the licensee. His Honour found that the hotel employed the security company and could not have foreseen that Mr. Wilson was going to act in the way he did. He said he could not find any negligence on its part.

Issues on the appeal 11 Mr. Starks submits that his Honour erred in finding verdicts for the respondents and contends that each was vicariously liable for the injury caused by Mr. Wilson's assault upon him.

Liability of the employer 12 An employer is vicariously liable for a tort or other actionable wrong committed by an employee in the course of employment. However, it is not every actionable wrong committed by an employee that will give rise to vicarious liability. Whether or not an employer is liable depends upon the scope of the employment. Thus, an employer will not be vicariously liable for a wrongful act of the employee if it is committed by the employee "on a frolic of his own": see Morris v. C.W. Martin & Sons Limited [1966] 1 QB 716 at 733; State of New South Wales v. Lepore [2003] 212 CLR 511 at [41]. Such an act is not within the "scope of the employment": As Gleeson CJ said in Lepore at [40]: "Not everything that an employee does at work, or during working hours, is sufficiently connected with the duties and responsibilities of the employee to be regarded as within the scope of the employment. And the fact that wrongdoing occurs away from the workplace, or outside normal working hours is not conclusive against liability." 13 It is well settled that an employer is liable for a wrongful act of the employee if the employer has authorised it. An employer may also be liable for unauthorised acts. That is also well settled. The difficulty that arises in the latter case is determining the circumstances in which an employer will be so liable. This was the question under consideration in Lepore. There Gleeson CJ restated, at [42], Salmond's formulation of the principle in Salmond, Law of Torts, namely that: "…an employer is liable even for unauthorised acts if they are so connected with authorised acts as they may be regarded as modes - although improper modes - of doing them but the employer is not responsible if the unauthorised and wrongful act is not so connected with the authorised act as to be a mode of doing it, but is an independent act." 14 The employer submitted that the case was indistinguishable from the facts in Deatons Pty. Limited v. Flew (1949) 79 CLR 370. In that case, a barmaid threw a glass of beer into the face of the plaintiff. The plaintiff was also hit by the glass. The plaintiff alleged that the barmaid had thrown it at him, the barmaid contending however that in throwing the beer at the plaintiff, the glass slipped out of her hand. There was also a dispute as to whether the plaintiff had spoken to the barmaid "using filthy expressions" and whether he had struck her on the side of the face. 15 The plaintiff sued the barmaid and her employer. The jury found a verdict against both. In the High Court, the employer was found not to be liable as the barmaid was not acting in the course of her employment or doing any act connected with or incidental to the work that she was employed to perform. Latham CJ said at p.379: "…the act [of the barmaid] was an act of personal resentment and was not in any way performed as on behalf of the employer. It was not done even in supposed furtherance of the interest of the employer … [it] was an independent personal act which was not connected with or incidental in any manner to the work which the barmaid was employed to perform." 16 Dixon CJ at pp.381-382 said: "… it was an act of passion and resentment done neither in furtherance of the master's interests nor under his express or implied authority nor as an incident to or in consequence of anything the barmaid was employed to do ." 17 McTiernan J put the matter in these terms at p.382: "… she was a barmaid in the appellant's hotel. In point of law she had an implied authority to do everything that was necessary for the fulfilment of the duties of the position of barmaid in that hotel. … There is no evidence that she had any further authority than that of a barmaid. The responsibility of the appellant for the consequences of the assault depends upon the question whether the barmaid assaulted the plaintiff in the course of fulfilling any duty which the appellant entrusted to her. The assault could not possibly be a manner of fulfilling any [such] duty …" 18 Williams J in his judgment endorsed the statement of principle in Salmond on Torts. His Honour cited the passage as it was dealt with by the Privy Council in Canadian Pacific Railways Co v. Lockhart (1942) AC 591 at 599, where it was stated in these terms: "… a master, as opposed to the employer of an independent contractor, is liable even for acts which he has not authorised, provided that are so connected with acts that he has authorised they may be regarded as modes - although improper modes - of doing them. In other words, a master is responsible not merely for what he authorises his servant to do but also for the way in which he does it . On the other hand, if the unauthorised and wrongful act of the servant is not so connected with the authorised act as to be a mode of doing it, but is an independent act, the master is not responsible: for in such a case the servant is not acting in the course of his employment but has gone outside of it ." (emphasis added) 19 In the present case, Mr. Wilson requested Mr. Starks to leave the hotel. Although the terms of his employment were not in evidence, there was no issue in the case as to his entitlement to do so. That was part of his job if the circumstances called for it. 20 In his written submissions, counsel for the respondents pointed out that there was no evidence to indicate that Mr. Wilson was required to make any physical contact with Mr. Starks in order to carry out his duties. However, in argument before the Court, he dealt with the argument that force might be used. Section 103(1) of the Liquor Act 1982 provides that a person employed in the position of Mr Wilson "may turn out, or cause to be turned out" persons acting, for example, in a disorderly or drunken way. As a matter of the plain language of the section and common experience, it might be expected that force could be used in such circumstances. 21 Counsel for the respondents accepted that there might be occasions when excessive force was used for which the employer would be liable. He accepted, for example, that if in the course of escorting a customer from the premises a security officer used excessive force, then the employer may well be liable. The employer submitted however, that Mr. Wilson's action in head-butting Mr. Stark was a gratuitous and unprovoked attack which had nothing to do with his duties as a security guard and was not simply an unauthorised mode of doing that for which he was employed. To use the words of Latham CJ in Deatons his action had "nothing at all to do with the performance of the duties of the barmaid". 22 There may of course be questions of degree as to whether an unexpected mode of the execution of an employee's duties will give rise to vicarious liability, as Gleeson CJ pointed out in Lepore at [54]: "Where acts of physical violence are concerned, the nature and seriousness of the criminal act may be relevant to a judgment as to whether it is to be regarded as a personal, independent act of the perpetrator, or whether it is within the scope of employment. A security guard at business premises who removes a person with unnecessary force may be acting in the course of employment." 23 There are ample examples in the authorities where this has been held to be the case: Gee v. NWQ Management Pty. Limited & Ors. [2002] NSWCA 77 is one. In Lepore, Gleeson CJ at [51] postulated that if, in Deatons, it had been established that part of the barmaid's duties was to keep order in the bar and "[i]f, on the facts, it had been open to regard her conduct as an inappropriate response to disorder, then the jury could properly have held the employer liable in trespass". However, an employer would be less likely to be held vicariously liable if, in addition to unnecessary violence there were other factors such as personal animosity. In such a case, a conclusion might more readily be drawn that an attack was an independent act directed against the victim even though the employee was carrying out duties at the time. 24 In this case, there was no evidence that Mr. Starks acted aggressively towards Mr. Wilson. Counsel for the respondents relied upon this as indicating that the assault was unprovoked and had nothing to do with the employment. However, the fact that there was no evidence of aggression or other behaviour that might have provoked Mr. Wilson's conduct, whilst relevant, is not determinative of whether Mr Wilson was acting in the course of his employment when he assaulted Mr Starks. Although Mr. Wilson's action in head-butting Mr. Starks was unreasonable, uncalled for, and not a usual mode for a security officer to use to persuade a customer to leave hotel premises, the fact is, Mr. Wilson acted in that way in the course of seeking to have Mr. Starks leave the premises. In my opinion, his action was so directly connected with his authorised acts that this case is one that falls on that side of the line that makes the employer vicariously liable.

Liability of the hotel and the licensee 25 Counsel for the respondents submitted that even if the employer was found to be vicariously liable, there was no basis in law upon which the occupier of the hotel could be vicariously liable as it was in the position of a principal and the employer was its independent contractor. It was submitted that vicarious liability does not extend to the relationship of principal and independent contractor. Hollis v. Vabu Pty. Limited (2001) 207 CLR 21. As a general principle, a person is not liable for the negligence of an independent contractor: Stevens v. Brodribb Sawmilling Co Pty. Limited (1986) 160 CLR 16 at 43; Northern Sandblasting Pty. Limited v. Harris (1997) 188 CLR 313. There is an exception to the general rule where the principal has directly authorised the wrongful act: Colonial Mutual Life Assurance Society Limited v. Producers and Citizens Co-Operative Assurance Co of Australia (1931) 46 CLR 41; Northern Sandblasting Pty. Limited v. Harris (1997) 188 CLR 313 per McHugh J at 366. 26 McHugh J gave further consideration to the circumstances in which a principal will be liable for the acts of an independent contractor in his dissenting judgment in Hollis v. Vabu. I will return to his Honour's judgment shortly. The real starting point for a consideration of the potential liability of the hotel and licensee is CML Assurance. In that case, an insurance agent made defamatory comments about another insurance company whilst canvassing for business for the appellant insurance company that had engaged him. The agent had been retained by the appellant company under an agreement that contained a term prohibiting the making of such comments. The defamed company brought an action for slander against the appellant company. 27 Gavan Duffy CJ and Starke J at p.46 said that although the relationship between the insurance company and the agent was in the nature of principal and independent contractor and not that of servant and master, the particular circumstances of the engagement gave the insurance company a significant degree of control and direction over his actions. Their Honours concluded that the agent was employed to use arguments to persuade members of the public to enter into insurance contracts with the appellant company and when the agent was engaged in that process he spoke "with the voice of the defendant". It followed, on their Honours' view, that the appellant company was liable for the agent's defamatory statements even though they had been uttered contrary to an express stipulation in the contract of engagement between the agent and the appellant company. 28 Dixon J at p.48 explained the principle in these terms: "In most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorised the doing of the act which amounts to a tort. The work, although done at his request and for his benefit, is considered as the independent function of the person who undertakes it, and not as something which the person obtaining the benefit does by his representative standing in his place and, therefore, identified with him for the purpose of liability arising in the course of its performance. The independent contractor carries out his work, not as a representative but as a principal." 29 Dixon J continued at pp.48-49: "… a difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity."

His Honour noted that there was no case that decided that a principal was liable for wrongful acts that were not authorised. His Honour concluded however, at p.50, that the appellant company was liable because the defamation had been committed by the wrong manner in which the agent had exercised his actual authority, "w hen acting as a true agent representing his principal in dealing with third parties. " (emphasis added). It is apparent from this passage that Dixon J considered the representational aspect of the relationship between the appellant and the agent to be a significant factor in finding the company liable.

30 The "representational" aspect was also considered relevant to the liability of a principal by the majority in Hollis v. Vabu. Their Honours noted that control was one of the factors underlying the doctrine of vicarious liability but was not the only one. They said at [42]: "In general, under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the cost of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise." 31 In Vabu, a pedestrian had been struck by a courier bicycle rider and suffered injury. The individual courier was not identified personally but was wearing the uniform of Vabu. The question before the Court was whether Vabu was vicariously liable for the negligent act of the bicycle courier. The majority held that the relationship between the courier and Vabu was that of employer/employee so that the doctrine of vicarious liability applied. In reaching that decision, their Honours referred to the detailed evidence of the relationship between Vabu and its couriers including the fact that the couriers had little control over the manner of performing their work; they were required to conform to a dress standard and to wear clothing identifying them as its couriers; and they had no control over the work being allocated to them. 32 McHugh J held that the couriers were independent contractors. His reasons for so finding are not relevant here. That categorisation did not, however, in his Honour's view, determine the question whether Vabu was liable for the negligence of the unidentified courier. His Honour considered that on the principles laid down in CML Assurance, Vabu was liable because the conduct had occurred when the task was being carried out "for the benefit of the principal as [its] representative". As his Honour said at [74] "[i]t is the agency principle recognised by this Court in CML that provides the appropriate solution for this important case." 33 His Honour then reviewed the various aspects of the relationship between Vabu and the couriers to determine whether, even though the relationship was that of principal and independent contractor, Vabu might nonetheless be liable. His Honour concluded that it was. He identified four factors that led him to that conclusion:

Vabu had delegated to the courier a task that it itself had agreed to perform;

the courier was not acting " as an independent functionary ". Rather he was carrying out his work " as Vabu's representative ";

the courier was subject to the general direction and control of Vabu; and

at the time of the accident, the courier was acting within the scope of his authority.

34 But for the matters to which I next refer, there may have been a question whether it was appropriate for this Court to explore the territory of potential liability of a principal for the acts of an independent contractor identified by McHugh J. I have come to the conclusion that it is not necessary to do so. It is sufficient, in my opinion, to assume the correctness of the proposition advanced by McHugh J and to consider the factors that he relied upon in founding liability in Vabu as they might apply in this case. In doing so however, I am not to be taken as saying that these are the only factors that might give rise to vicarious liability if McHugh J's approach is correct. Rather, they were the factors relevant in Vabu. 35 Presumably the hotel could have engaged staff directly to act as the security guards and in that sense have done the work itself so as to provide some comparison with the first factor identified by McHugh J as being relevant. I have found that Mr. Wilson was acting within the scope of his authority (the fourth factor). However, there was no evidence in the case as to the precise relationship between the hotel and the employer. In particular, there was no evidence that the employer was carrying out the security arrangements as the hotel's representative (the second factor). For example, there was no evidence of uniform, or other livery identification with the hotel. Nor was there any evidence that the security guards were subject to the hotel's general direction and control (the third factor). There was no evidence as to how the security tasks were performed, the types of action that were to be taken to manage the clientele, what, if any, directions were given as to times on duty, areas to be patrolled or the like. It could be guessed or even assumed that the hotel would have given at least some such directions. But guesses and assumptions are not evidence.

36 Thus, of the four factors considered by McHugh J to be relevant, only one, (the fourth factor) and a variation of another (the first factor), existed here. Significantly, there was no representational aspect of the relationship on the evidence before the Court and no evidence of control. Nor were there any other factors in this case which might be considered relevant to the question whether vicarious liability should be imposed. In these circumstances, I am of the opinion that this is not a case where vicarious liability could be imposed on the hotel. 37 It should also be pointed out that this case is different from Vabu in this important respect. In Vabu, the relationship under consideration was that between Vabu and the courier so as to determine whether Vabu was vicariously liable for the negligent act of the courier. Here, the question in issue is whether the hotel is vicariously liable for a wrongful act for which the employer is itself liable only because of the application of the doctrine of vicarious liability. Given the paucity of evidence in the case, it is not possible to say whether that difference would have been sufficient to distinguish it from the approach taken by McHugh J. 38 The appellant also submitted that the hotel would be liable as an employer because of the provisions of the Liquor Act. Under that Act, a licensee has certain statutory obligations in relation to licensed premises. Under some provisions of the Act, a licensee is given permission to take certain action in aid of its obligations. Thus under s.103 to which I have referred earlier, a licensee or the employee of a licensee may refuse to admit persons to the licensed premises or may "turn out or cause to be turned out" persons from the premises where that person is "intoxicated, violent, quarrelsome or disorderly" (emphasis added). An employee is defined in s.4 of the Act to include a person engaged under a contract for services. Presumably, the employer here was engaged by the hotel or licensee under a contract for services. 39 The appellant argued that because the employer was, for the purposes of the Liquor Act, an employee of the hotel, the hotel was vicariously liable for the actions of its "employee's" employee, Mr Wilson. 40 In Gee v. NWQ Management Pty. Limited & Ors. at 77, Mason P observed that although the Liquor Act imposed a statutory obligation upon the licensee in respect of the conduct of the premises, and, for the purposes of the Act made those obligations non-delegable, it did not follow that the duties were non-delegable for the purposes of the law of tort. 41 In this case, the appellant seeks to invoke the principles of vicarious liability as against the hotel by relying upon the statutory deeming of the employer as an employee. In my opinion, the Act does not have that effect. Part 6 of the Act deals with licensed premises. Section 103, which appears in Part 6 not only aids the licensee in the performance of its obligations in the control of licensed premises, it authorises action that might otherwise be unlawful such as the forceful ejection of an intoxicated person from the premises. The section has nothing to say, in my opinion, about the liability the hotel may have when a security guard, not directly employed by it, uses excessive force in carrying out a task otherwise authorised by s.103. If the hotel is to be liable, it must be under the principles of the general law. On the facts here, I have found that there is no such liability.

42 I should finally make reference to the decision of this Court in North Sydney Leagues Club Limited v. Berecry & Ors. (2002) NSWCA 154. In that case, a patron of the Club was asked to leave by one of the security officers. In the result, the patron was assaulted by the security officer and sustained injury. The question was whether the Club was liable. In that case there was evidence as to the contractual arrangements between the Club and the company that provided the security services. Specifically, the letter of engagement provided that the objective of the security personnel provided to the Club would be to "assist in maintaining good order …". The Court concluded in that case that the Club had not delegated its duty of care. 43 In this case, the relationship between the hotel and the employer is not known. In those circumstances there is no basis upon which the hotel can be made liable for the tort committed by Mr. Wilson. Having reached this conclusion, it also becomes unnecessary to decide whether the liability of the hotel and the licensee should be considered separately. 44 Before proposing the orders that flow from my reasons I should say something about costs. The respondents were represented by the same solicitor and counsel both in the Court below and on the appeal having been advised that they had come to an agreement for that purpose. The Court is not and does not need to be privy to that agreement or when it was made. However, it does raise a costs question because the appeal has been successful against the one respondent only. In the usual case, a successful party is entitled to costs. However, here, where the successful respondents have had the same legal representation as the unsuccessful respondent, it does not necessarily follow that costs or all the costs should follow the event. 45 The question is then, what is the appropriate order for costs in relation to the hotel and licensee. The cases of the hotel and licensee were different from that of the employer, so that to that extent, it was necessary for additional time to be allocated to their case. However, as their argument involved the same legal principles I do not think it can be said that any substantial part of the hearing at first instance or the appeal was devoted to their case. However, the hotel and the licensee may have incurred costs in the preparation of the case that were not common to the costs that had to be incurred by the employer. To that extent, the hotel and licensee should have their costs both at first instance and on appeal. In the circumstances, I consider that the appropriate order is that the hotel and licensee should pay their own costs at first instance and of the appeal, except to the extent that they separately incurred costs that were not incurred in common with the costs of the employer.

46 Accordingly, I would propose the following orders:

Set aside verdict for the second defendant (first respondent).

Verdict for the plaintiff as against the second defendant, judgment accordingly.

Verdict for the third and fourth defendants (second and third respondents) affirmed.

Set aside the costs order below in favour of the respondents.

First respondent to pay appellant's costs of the appeal and of the hearing at first instance.

The second and third respondents to bear their own costs of the appeal and in the Court below, except to the extent that they separately incurred costs in the preparation of the case at first instance and on the appeal that were not incurred in common with the costs incurred by the first respondent. The appellant is to pay any such separately incurred costs. 47 GROVE JA: I agree with Beazley JA

Last Modified: 09/29/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Liquor Act 1982(NSW)

At a glance

Court

Decision date

Before

Source

Judgment (51 paragraphs)

Legislation Cited (2)

Cases Cited (6)